As a key supplier to the automotive industry, Aptiv’s mission is to ‘enable a safer, greener and more connected future of mobility’. The company’s products include high-voltage wiring and electrical centres, power distribution boxes and battery connectors, plug-in chargers and light-weight aluminium wiring all for use in electric vehicles. Aptiv is also a major supplier of active and automated safety systems including collision warning systems, lidar units and other sensing technologies that enable active safety features, such as lane departure warning and auto braking.
Engagement issue
Labour practices
Engagement objective
To better understand Aptiv’s approach to Labour practices and encourage the company to upload standards that go far beyond the legal minimums to prioritise employee health and wellbeing.
Activity
While many of Aptiv’s employees are software engineers, the majority of its workforce comprises workers in low-skilled factory jobs. Labour standards in Mexico, a significant pool of labour for Aptiv, offer little protection to workers. Nearly half of the Mexican population lives in poverty1, in addition to which, the country has low social mobility and the richest 1% receives 21% of the total population’s income each year (representing one of the highest Gini coefficients among OECD countries)2. Meanwhile, labour practices are characterized by high levels of informality, and laws regarding union representation have been seen to promote the interests of employers over those of workers3.
We had been concerned to see numerous reports in the media of Aptiv allegedly preventing workers from unionizing and paying wages below the poverty line. If true, we believe these allegations significantly undermine Aptiv’s commitment to ‘foster healthy, inclusive workplaces and communities’ and ‘engaged employees’. Further, this may imply that Aptiv is putting profit ahead of employees’ wellbeing. Along with a like-minded investor, we put our concerns to Aptiv, firs in writing and later during a call with the Head of Investor Relations.
Aptiv informed us that it collects yearly wage data for employees in Mexico from a third party and aims to be competitive in the context of the local market, for example, through various non-salary related benefits including paying for employees' transport and opening vaccination centres. Its policy is to fully respect rights of employees to unionise and they've run a training program for all supervisors in the region on respecting workers' rights to unionise. The Mexican government has also been increasing the minimum wage since 2019: In 2019 there was a 100% increase in minimum wage at the border; 60% broader Mexico. In 2020 it was 5% at the border, and 20% broader Mexico. 2021 15% both at the border and in general for Mexico. Most of APTV's facilities are at the border.
Outcome
Partially successful. During the call we learned more about Aptivs pay practices in Mexico. However, overall, we were disappointed with the call and felt that Aptiv failed to respond adequately to this issue.
Next Steps
We finished the discussion by highlighting that one of the company’s mission statements is to 'foster a healthy, inclusive workplaces and communities’ and ‘engaged employees’ and encouraged investor relations to consider research by a Think Tank that informed our position. We continue to monitor the company for progress and revisit the topic with Aptiv as appropriate.
3 Ibid